Making Financial Headlines · Page 1
Wall Street Gives the Iran War a Checkout Time
· New York time
Alicia Levine of BNY's wealth management business says markets have not priced in the possibility that the Iran war lasts a long time. She described a prolonged conflict as the market's real black swan, a risk with consequences that investors may be underestimating. Her assessment challenges the comfort of treating a war as a brief disturbance followed by a tidy return to normal. The length of a conflict can matter to energy prices, inflation and business planning, all of which feed into the assumptions investors use to value assets. A quick resolution and a long campaign are not interchangeable entries in a spreadsheet. The warning is an assessment, not a prediction that the war will follow a particular course. It does, however, put the market's apparent confidence in an awkward position. Investors can price a share in seconds, but the duration of a conflict is not something a trading desk can settle before lunch. Households with retirement accounts and companies making spending plans also have reason to notice the assumptions built into market prices. The financial world likes an ending that fits neatly inside a quarterly report. Levine's point is that the calendar may have other ideas, and it has not promised to consult the consensus forecast.
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